Winding up orders can work A survey among UK companies by the Better Payment Practice Group has found that four out of five have successfully issued a winding up order, which can be issued to put a business into compulsory liquidation when it does not pay its debts.

The poll of the 370 respondents found that 27 per cent had issued an order and 82 per cent were successful.

The poll of the 370 respondents found that 27 per cent had issued an order and 82 per cent were successful.

Philip King, a member of the BPPG and director general of the Institute of Credit Management, said: "Winding up orders should be seen as a last resort and only used when other collection methods have proved ineffective.

"It is also sensible to serve a statutory demand on the company first. This is free, save for the cost of preparation, and failure to comply with it within 21 days is an automatic ground for winding up. If a company is solvent, the mere threat of winding up is often effective in getting them to pay what is due.

"However, as the poll shows, issuing a winding up order against a company can be an effective method to obtain payment of outstanding debts.

"It works by winding up the debtor company if payment is not received within 21 days and then using its assets to pay those owed money. If the company is insolvent when wound up, there are unlikely to be assets to pay all creditors in full, and only a proportion of the outstanding debt will be settled." ..SUPL: